Question

Garrison Co. produces three products — X, Y, and Z — from a joint process. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Last year all three products were processed beyond split-off. Joint production costs for the year were $138,000. Sales values and costs needed to evaluate Garrison's production policy follow.

	Units		Sales Value at			If Processed Further
Product	Produced		Split Off			Sales Value			Additional Costs
x	24,000		$	44,500		$	102,500		$	5,700
y	13,000			28,500			53,500			12,000
z	3,000			34,000			48,000			15,000

The amount of joint costs allocated to product Z using the physical measure method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):

Multiple Choice

• $10,350.

• $40,850.

• $44,850.

• $55,200.

• $82,800.

Answer 1

Allocation of Joint Cost

Product	Physical unit	Weight	Allocated joint cost
X	24000	60%	138000*60% = 82800
Y	13000	32.50%	44850
z	3000	7.50%	10350
Total	40000	100%	138000

So answer is a) $10350